EFG Hermes spends €550m for European wind portfolio

The private equity division of Cairo-based investment bank EFG Hermes has purchased a 664MW European wind portfolio for €550 million.

EFG used its renewable energy platform Vortex to buy a 49 percent interest in a wind portfolio owned by a subsidiary of EDP Renováveis (EDPR). The deal gives EFG a stake in 23 wind farms across Europe: 348MW in Spain, 191MW in Portugal, 71MW in Belgium and 54MW in France. The assets have been operating for an average of four years and have 15 years of regulatory life remaining.

EFG, one of the largest investment banks in the Middle East and North Africa (MENA) region, is paying for the acquisition with an €11 million seed investment which leveraged €209 million of sovereign capital from Gulf Cooperation Council members. The remaining €330 million is coming from a 13-year loan facility provided by five undisclosed European banks.

Acquiring the wind portfolio is EFG’s second transaction in Europe and the first since purchasing a 49 percent stake in EDPR France 18 months ago. “It underlines our ability to identify, structure and execute large-scale deals that are building the investment bank’s infrastructure platform,” Karim Moussa, head of private equity at EFG Hermes, said in a statement. The purchase brings its assets under management to $1.1 billion from $600 million at the end of last year.

João Manso Neto, chief executive at EDPR, said the deal is part of its asset rotation plan. “This strategy allows EDPR to crystallise the value of its projects’ future cashflow stream and re-invest in the development of quality and value accretive projects,” he said.

The EDPR France deal cost EFG $208 million for a significant interest in 33 operational wind farms generating a 334MW. It was the bank’s first acquisition outside the MENA region and the first under the private equity division’s direct investment strategy. This transaction was again funded by a loan from European banks, commitments from the Gulf Cooperation Council and an EFG seed investment of $5 million.

EFG’s goal is for Vortex to own more than 1GW of installed renewable capacity in the next two years. “We will continue to pursue high quality yield-generating assets with superior return potential for our investors in developed markets and selective emerging markets,” Moussa said.